<PAGE> 1
AUDITED FINANCIAL STATEMENTS AND SCHEDULES
U.S. BANCORP 401(K) SAVINGS PLAN
YEARS ENDED DECEMBER 31, 1999 AND 1998
<PAGE> 2
U.S. Bancorp 401(k) Savings Plan
Audited Financial Statements and Schedules
Years ended December 31, 1999 and 1998
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors............................................1
Audited Financial Statements and Schedules
Statements of Net Assets Available for Benefits...........................2
Statements of Changes in Net Assets Available for Benefits................3
Notes to Financial Statements.............................................4
Schedule H, Line 4i - Schedule of Assets Held for
Investment Purposes at End of Year....................................10
Schedule G, Part III - Nonexempt Transactions............................12
</TABLE>
<PAGE> 3
Report of Independent Auditors
Benefits Administration Committee
U.S. Bancorp
We have audited the accompanying statements of net assets available for benefits
of the U.S. Bancorp 401(k) Savings Plan (the Plan) as of December 31, 1999 and
1998, and the related statements of changes in net assets available for benefits
for the years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1999 and 1998, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes at end of year as of December 31, 1999 and
nonexempt transactions for the year then ended are presented for purposes of
additional analysis and are not a required part of the financial statements but
are supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in our audits of the financial statements and, in
our opinion, are fairly stated in all material respects in relation to the
financial statements taken as a whole.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
June 21, 2000
1
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U.S. Bancorp 401(k) Savings Plan
Statements of Net Assets Available for Benefits
<TABLE>
<CAPTION>
DECEMBER 31
1999 1998
----------------- ----------------
<S> <C> <C>
ASSETS
Cash $ 3 $ 1,333
Investments, at fair value (see Note 3) 1,609,585,344 1,768,760,286
Accrued income 786,378 625,894
Employer contribution receivable 3,751,660 16,509,553
----------------- ----------------
1,614,123,385 1,785,897,066
LIABILITIES
Settlements payable and other liabilities 116,597 147,401
----------------- ----------------
Net assets available for benefits $ 1,614,006,788 $ 1,785,749,665
================= ================
</TABLE>
See accompanying notes.
2
<PAGE> 5
U.S. Bancorp 401(k) Savings Plan
Statements of Changes in Net Assets Available for Benefits
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998
---------------- ----------------
<S> <C> <C>
Additions:
Contributions:
Employer $ 34,671,212 $ 16,686,245
Participants 65,827,261 61,085,371
Interest and dividend income 31,502,779 23,604,059
Dividends from U.S. Bancorp 13,524,813 14,860,088
Transfers from plans of acquired institutions 154,298,325 13,839,327
Other additions 891,613 1,282
---------------- ----------------
300,716,003 130,076,372
Net gain on sale or distribution of securities 151,476,243 136,091,995
---------------- ----------------
452,192,246 266,168,367
Deductions:
Distributions to participants 273,274,693 216,255,376
Administrative expenses 2,331,219 1,476,306
---------------- ----------------
275,605,912 217,731,682
---------------- ----------------
176,586,334 48,436,685
Decrease in unrealized appreciation in fair value
of securities (348,329,211) (134,157,237)
---------------- ----------------
Net additions (171,742,877) (85,720,552)
Net assets available for benefits at beginning of year 1,785,749,665 1,871,470,217
---------------- ----------------
Net assets available for benefits at end of year $ 1,614,006,788 $ 1,785,749,665
================ ================
</TABLE>
See accompanying notes.
3
<PAGE> 6
U.S. Bancorp 401(k) Savings Plan
Notes to Financial Statements
December 31, 1999
1. DESCRIPTION OF THE PLAN
The following description of the U.S. Bancorp 401(k) Savings Plan, formerly the
U.S. Bancorp Capital Accumulation Plan (the Plan), provides only general
information. Participants should refer to the 401(k) Savings Plan section of the
"Investing in Your Future" handbook for a more complete description of the
Plan's provisions which can be obtained from the U.S. Bancorp's U-Connect
Service Center.
The Plan is a defined contribution retirement plan covering substantially all
personnel who have completed one year of service. Each participant may elect to
contribute up to a maximum of 16% of his or her annual salary each year. These
contributions are deposited in the Plan semi-monthly. Effective January 1, 1999,
the Company contributes an amount equal to 100% of each participant's
contribution up to 4% of his or her annual salary. Prior to December 31, 1998,
contributions up to a maximum of 6% of annual pay were matched 50% by the
Company. Matching contributions are invested in the U.S. Bancorp Stock Fund.
Participants are immediately vested in all contributions.
Each participant may elect to have his or her balances invested in various
investment funds. Each participant's account is credited with the participant's
contributions, the related matching contribution and an allocation of the
earnings of the funds in which the participant has elected to invest.
Allocations are based upon participant account balances, as defined.
The Plan contains provisions allowing participants to borrow from their Plan
account. Participants may take only one loan in a 12-month period and have only
two loans outstanding at a time. The minimum loan is $1,000 and the maximum is
the lesser of 50% of their account balance, or $50,000 minus their highest
outstanding loan balance during the past 12 months.
U.S. Bancorp (the Company), has the right, under the Plan, to suspend or
terminate the Plan at any time. In the event of a termination of the Plan, all
benefits of the participants are eligible for distribution.
4
<PAGE> 7
U.S. Bancorp 401(k) Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
The Plan includes an Employee Stock Ownership Plan (ESOP) fund. For most active
plan participants, shares in the Company stock fund became part of the new ESOP
fund and the dividends earned on U.S. Bancorp stock are distributed to
participants. This amount will be invested in the Company stock fund and
transferred to the ESOP fund on an annual basis. Dividends paid on U.S. Bancorp
common stock held in the ESOP are recorded in the dividend pass through account
and then distributed to participants. Dividends distributed to participants were
$13,524,813 and $10,287,145 for the plan years ended December 31, 1999 and 1998,
respectively.
MERGERS
During 1999 and 1998, several defined contribution plans merged into the U.S.
Bancorp 401(k) Savings Plan. These plans were originally established for the
employees of companies that U.S. Bancorp acquired over the past several years.
Effective March 31, 1999, the Piper Jaffray Companies 401(k) Plan and Piper
Jaffray ESOP, with combined assets of $154,298,325, merged with the Plan.
2. SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING METHOD
The accounting records of the U.S. Bancorp 401(k) Savings Plan are maintained on
the accrual basis in conformity with generally accepted accounting principles.
INVESTMENTS
Investments are stated at aggregate fair value. Securities which are traded on a
national securities exchange or which are actively traded in local
over-the-counter markets are valued at the last reported sales price of the
year; securities traded in the national over-the-counter market are valued at
the last reported bid price of the year. The fair value of participation
interests in pooled funds is based on the quoted redemption value on the last
business day of the year. Participant notes receivable are valued at cost which
approximates fair value.
5
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U.S. Bancorp 401(k) Savings Plan
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Brokers' commissions and other expenses incurred upon the purchase of securities
are included in the cost of the securities. Brokers' commissions and other
expenses incurred upon the sale of securities are reflected as a reduction in
the proceeds from the sale.
The change from the beginning to the end of the year in the difference between
current value and the cost of investments is reflected in the statement of
changes in net assets available for benefits as change in unrealized
appreciation or depreciation in the fair value of securities.
The net gain on sale of securities is the difference between the proceeds
received and the average cost of investments sold. Purchases and sales of
securities are recorded on the trade date. If a trade is open at the end of the
year, a settlement receivable or payable is reflected in the statement of net
assets available for benefits.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
RECLASSIFICATION
Certain 1998 amounts have been reclassified to conform to the 1999 presentation.
6
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U.S. Bancorp 401(k) Savings Plan
Notes to Financial Statements (continued)
3. INVESTMENTS
During 1999 and 1998, the Plan's investments appreciated (depreciated) in fair
value as shown below:
<TABLE>
<CAPTION>
REALIZED/UNREALIZED
APPRECIATION/
(DEPRECIATION) IN FAIR FAIR VALUE
VALUE DURING YEAR AT END OF YEAR
----------------- --------------
<S> <C> <C>
Year ended December 31, 1999:
Common stock $ 8 $ 936
Real estate 41,147 -
Mutual funds 102,136,271 942,512,300
U.S. Bancorp (USB) common stock (299,030,394) 627,943,023
Participant notes receivable - 39,129,085
----------------- ----------------
$ (196,852,968) $ 1,609,585,344
================= ================
Year ended December 31, 1998:
Mutual funds $ 43,853,074 $ 733,193,550
U.S. Bancorp (USB) common stock (41,918,316) 1,001,167,542
Participant notes receivable - 34,399,194
----------------- ----------------
$ 1,934,758 $ 1,768,760,286
================= ================
</TABLE>
The Plan's investments are held in various bank administered trust accounts.
Investments that represent 5% or more of the Plan's net assets are as follows:
<TABLE>
DECEMBER 31, 1999
<S> <C>
U.S. Bancorp common stock, 26,369,757 shares $ 627,943,023
First American Funds, Inc., International Fund, 3,809,761 shares 91,548,563
First American Funds, Inc. Prime Obligations Fund,
164,814,914 shares 164,814,914
First American Funds, Inc., Small Capital Value Fund,
5,587,149 shares 82,969,169
First American Funds, Inc.--Large Capital Value Fund,
7,537,007 shares 160,086,018
First American Funds, Inc.--Equity Index Fund, 8,590,177 shares 244,390,547
</TABLE>
7
<PAGE> 10
U.S. Bancorp 401(k) Savings Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
<TABLE>
<S> <C>
DECEMBER 31, 1998
U.S. Bancorp common stock, 28,201,903 shares $ 1,001,167,542
First American Funds, Inc. Prime Obligations Fund,
151,021,275 shares 151,021,275
First American Funds, Inc.--Small Capital Value Fund,
6,462,736 shares 90,801,435
First American Funds, Inc.--Large Capital Value Fund,
6,106,039 shares 136,042,544
First American Funds, Inc.--Equity Index Fund, 7,539,428 shares 184,339,017
</TABLE>
4. TRANSACTIONS WITH PARTIES-IN-INTEREST
On December 31, 1999 and 1998, the Plan owned 26,369,757 and 28,201,903 shares
of U.S. Bancorp common stock, respectively.
For the years ended December 31, 1999 and 1998, the Plan distributed shares of
U.S. Bancorp common stock to participants as follows:
<TABLE>
<CAPTION>
DISTRIBUTIONS
----------------------------
SHARES COST
--------- -----------
<S> <C> <C>
1999 2,015,469 $21,708,095
1998 2,298,475 $24,649,288
</TABLE>
Fees paid for trust services rendered by parties-in-interest were based on
customary and reasonable rates for such services.
Other expenses incurred represent professional fees paid to the Plan's benefit
consultants and actuaries and the costs of printing enrollment forms, summary
plan descriptions and other miscellaneous items. These expenses were paid
directly by the Plan for the year ended December 31, 1999, and were reimbursed
to the Company in the amount of $367,893 for the year ended December 31, 1998.
8
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U.S. Bancorp 401(k) Savings Plan
Notes to Financial Statements (continued)
5. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service,
dated March 31, 1999, stating that the Plan is qualified under Sections 401(a)
of the Internal Revenue Code (the Code) and, therefore, the related trust is
exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan Administrator
believes the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan is qualified and
the related trust is tax-exempt.
9
<PAGE> 12
U.S. Bancorp 401(k) Savings Plan
EIN: 41-0255900
Plan #004
Schedule H, Line 4i - Schedule of Assets Held for Investment
Purposes at End of Year
December 31, 1999
<TABLE>
<CAPTION>
DESCRIPTION OF INVESTMENT INCLUDING
IDENTITY OF ISSUE, BORROWER, MATURITY DATE, RATE OF INTEREST, PAR OR CURRENT
LESSOR OR SIMILAR PARTY MATURITY VALUE COST VALUE
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUTUAL FUNDS
First American Investment Funds, Inc. 3,809,761 units of International Fund $ 52,999,175 $ 91,548,563
6,201,395 units of Fixed Income Fund 68,739,128 64,680,555
8,590,177 units of the Equity Index Fund 145,457,735 244,390,547
5,587,149 units of the Small Capital
Value Fund 76,698,027 82,969,169
7,537,007 units of Large Capital Value
Fund 174,855,184 160,086,018
164,814,914 units of Prime Obligations
Fund 164,814,914 164,814,914
2,880,580 units of Mid Capital Value
Fund 43,711,658 37,620,386
3,362,852 units of Strategy Growth &
Income Fund 38,146,789 39,648,026
350,944 units of Strategy Income Fund 3,866,485 3,600,685
864,974 units of Strategy Growth Fund 10,454,358 11,132,209
621,400 units of Strategy Aggressive
Growth Fund 7,788,409 8,513,175
441,582 units of Small Capital Growth
Fund 8,820,733 10,200,534
450,884 units of Mid-Cap Growth Fund 6,410,709 7,214,141
</TABLE>
10
<PAGE> 13
U.S. Bancorp 401(k) Savings Plan
EIN: 41-0255900
Plan #004
Schedule H, Line 4i - Schedule of Assets Held for Investment
Purposes at End of Year (continued)
<TABLE>
<CAPTION>
DESCRIPTION OF INVESTMENT INCLUDING
IDENTITY OF ISSUE, BORROWER, MATURITY DATE, RATE OF INTEREST, PAR OR CURRENT
LESSOR OR SIMILAR PARTY MATURITY VALUE COST VALUE
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUTUAL FUNDS (CONTINUED)
First American Investment Funds, Inc. 761,276 units of Large Cap Growth Fund $ 15,611,639 $ 16,093,378
(continued) ---------------- ----------------
818,374,943 942,512,300
CORPORATE STOCK
*U.S. Bancorp 26,369,757 shares of common stock 334,149,091 627,943,023
MISCELLANEOUS ASSETS
Tyco Intl 24 shares of common stock - 936
PARTICIPANT NOTES RECEIVABLE $39,129,085 principal amount at
interest rates from 5% to 11% - 39,129,085
---------------- ----------------
TOTAL ASSETS HELD FOR INVESTMENT PURPOSES $ 1,152,524,034 $ 1,609,585,344
================ ================
</TABLE>
----------
[FN]
* Indicates party-in-interest to the Plan.
</FN>
11
<PAGE> 14
U.S. Bancorp 401(k) Savings Plan
EIN: 41-0255900
Plan #004
Schedule G, Part III - Nonexempt Transactions
Year ended December 31, 1999
<TABLE>
<CAPTION>
(B) RELATIONSHIP TO PLAN,
EMPLOYER, OR OTHER
(A) IDENTITY OF PARTY INVOLVED PARTY-IN-INTEREST (C) DESCRIPTION OF TRANSACTION
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Bancorp Employer/Plan Sponsor Payment by the Plan of certain expenses was
recently challenged by the Department of
Labor on audit. In response, U.S. Bancorp
voluntarily reimbursed the Plan for expenses
paid by the Plan totaling $15,801, plus
earnings of $6,043. This response was deemed
sufficient by the Department of Labor in a
letter dated May 30, 2000, committing the
Department to take no further action on the
challenged expenses. The reimbursement was
not an admission that payment by the Plan of
all of the reimbursed expenses was
prohibited. U.S. Bancorp maintained in its
response to the Department of Labor, and
continues to maintain, that at least $6,022
of the reimbursed expenses was, in fact,
properly paid by the Plan under existing
rules and regulations.
</TABLE>
Columns (d) through (j) are not applicable.
12
